ASX Listing Rules Consultation

Kevin LewisChief Compliance OfficerASX Limited

February 2019

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Contents

ASX Listing Rules consultation

Update on corporate governance and other consultations

Current ASX Listings Compliance focus areas

Some other matters to note

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Consultation paper Simplifying, clarifying and enhancing the integrityand efficiency of the ASX listing rules released 28/11/18:

improving market disclosures and other integrity measures

making the LR simpler and easier to follow

efficiency measures

updating timetables for corporate actions

enhancing ASX’s powers to monitor and enforce compliance

correcting gaps or errors in the LR

new/updated Guidance Notes

Submissions due 1/3/19; changes due to come into effect on 1/7/19

ASX Listing Rule consultation

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Quarterly activity reports for App 4C reporters

Enhanced disclosures in quarterly activity reports for App 5B reporters

Standardised NTA disclosures by LICs and LITs

Clearer disclosure of closing dates for receipt of director nominations

Standardised disclosure of voting results at meetings of security holders

More consistent disclosure of underwriting arrangements

‘Good fame and character’ requirement for new listings extended to CEOs

Improving market disclosures and other integrity measures

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Persons responsible for communication with ASX on LR issues to undertake a course and pass an exam on the LR

Employee incentive scheme securities not to be voted on LR resolutions unless certain conditions met

Documents for release to market to include, or be sent under a covering letter including, the name, title and contact details of a person who security holders and other interested parties can contact if they have any queries

More granular data in security holder distribution schedules

Improving market disclosures and other integrity measures

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Clearer regime for announcing issues of securities and seeking their quotation:

New App 2A (application for quotation)

Substantially modified App 3B (notification of new issue)

Improved reporting of CDIs on issue by foreign issuers (new App 4A)

Clearer working capital requirements for assets test listings in LR 1.3.3

Streamlined requirements for entities to access extra 10% placement capacity in LR 7.1A

Making the LR simpler and easier to follow

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Lists of equity issues that can be made without security holder approval under LR 7.2, 7.6, 7.9 and 10.12 rationalised

Requirements for notices of meetings proposing resolutions under LR 7.1, 7.1A, 7.4, 10.1, 10.11 and 10.14 rationalised

LR 10.15 and 10.15A merged + new requirement for director’s total remuneration package to be disclosed

Voting exclusions in LR 14.11.1 rationalised

Making the LR simpler and easier to follow

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Simplified escrow regime for restricted securities

Profit test listings can notify ASX of continuing profits under LR 1.2.5A in listing prospectus/PDS/information memorandum

Simplified agreements for admission and quotation in App 1A, 1B and 1C

9 standard waivers built into LR

Standard forms removed from Appendices and made available on ASX Online

Efficiency measures

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Standard period of 5 business days for securities to be issued and application for quotation to be lodged with ASX for:

DRP issues (currently 10 business days after dividend payment date)

Securities issued to satisfy interest payments (currently no time limit)

Converted securities (currently 15 business days after conversion)

Bonus securities (currently 10 business days after record date)

Equal access buy backs (currently no time limit)

SPP issues (currently no time limit)

Flexibility on interest payments dates for debt securities

Updating timetables for corporate actions

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Option expiry notices no longer required for options substantially out of the money

New timetables for:

splits/consolidations

cash returns of capital

returns of capital by way of in specie distribution of securities in another entity

Timetable for court-approved reorganisations of capital replaced by timetable for mergers or takeovers effected via a scheme of arrangement

Numerous drafting changes to timetables

Updating timetables for corporate actions

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Class waivers

Power to impose conditions on no-action letters

New LR 18.5A confirming powers and discretions under LR may be exercised in ASX’s absolute discretion and subject to conditions

ASX’s power under LR 18.7 to ask for information, documents or explanations to confirm compliance with LR extended

Examples of requirements ASX may impose to ensure compliance with LR listed in LR 18.8

New LR 18.8A giving ASX power to censure for egregious rule breaches

Enhancing ASX powers to monitor and enforce rules

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Gaps in time limits to apply for quotation of securities filled

Flaw in definition of variable “A” in LR 7.1 and 7.1A.2 corrected

LR 7.4 and 7.5 amended to allow listed entity to have an agreement to issue securities ratified by security holders

LR 10.1 amended to deal more appropriately with agreements to acquire or dispose of substantial assets

Corrections to LR 10.3 (transactions exempted from LR 10.1)

Improved definitions of “associate”, “child entity”, “control” and “related party”

Correcting gaps or errors in the LR

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GN 1 Applying for Admission – ASX ListingsGN 11 Restricted Securities and Voluntary EscrowGN 12 Significant Changes to Activities

Changes implementing new escrow regime

Disclosure and escrow measures to deal with financial advisers extracting excessive equity-based fees and perquisites on new and back door listings

New guidance in GN 12 on “pre-emptive loans”

GN 13 Spin-outs of Major Assets

Enhanced guidance on LR 11.4 prohibition on spin-outs of major assets and exceptions to prohibition in LR 11.4.1

New/updated Guidance Notes

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GN 21 The Restrictions on Issuing Equity Securities in Chapter 7 of the Listing Rules

Work sheets to calculate placement capacity under LR 7.1 and 7.1A.2

New guidance on notices of meeting proposing resolution to approve issue of securities under LR 7.1, 7.1A or 7.4 (inc. requirement to name recipients or to describe basis on which they were identified or selected)

GN 24 Acquisitions and Disposals of Substantial Assets Involving Persons in a Position of InfluenceGN 25 Issues of Equity Securities to Persons in a Position of Influence

Lists of common waivers

Firmer stance on granting waivers outside these lists

New/updated Guidance Notes (cont.)

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GN 33 Removal of Entities from the ASX Official List

Seeking to avoid disclosure obligations under ss 674 and 675 added to list of unacceptable reasons why an entity might ask to be removed from official list

Disclosure required in market announcement and notice of meeting whether entity will continue to be an unlisted disclosing entity under s 675

Additional guidance on contents of notices of meeting, voting exclusions and notification of meeting results

New issue - ASX seeking feedback on whether resolution to approve a voluntary de-listing should be an ordinary or a special resolution

New/updated Guidance Notes (cont.)

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GN 33 Removal of Entities from the ASX Official List (cont.)

Amended policy on automatic removal of long-term suspended entities - from 1 July 2019, ASX will automatically remove an entity from the official list if it has:

been suspended from quotation for a continuous period of 2 years (currently 3 years) or

failed to lodge any of the financial statements or other documents referred to LR 17.5 for more than 12 months

whichever occurs first

New/updated Guidance Notes (cont.)

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Consultation on 4th edition of ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations:

Closed 27 July 2018

Over 100 submissions received and analysed

Final draft approved by Council

To be reviewed in light of final report from Hayne Royal Commission

Effective date originally 1 July 2019 but will be deferred to 1 January 2020

ASX likely to consult on changes to LR Chapter 5 in 2H CY 2019 to address:

scoping studies

changes to SPE PRMS framework for petroleum projects

Corporate governance and other consultations

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Cryptocurrency/ICOs

Emerging market issuers

Advisers facilitating spread through artificial means

Advisers taking excessive fees and secret commissions

Related party transactions

Use of social media to pump share price or publish unacceptable material

Poor governance/repeated rule breaches

ASX will use its suspension and removal powers to force remediation/prevent market contamination:

Since 2017, 14 entities removed for serious/persistent LR breaches

Current ASX Listings Compliance focus areas

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Restructured and expanded ASX Listings Compliance team:

Dedicated admissions teams in Sydney and Perth

Supervision of listed entities by sector rather than alphabet

New Reviews and Investigations team

Dedicated Investment Products Manager

Admission decisions:

Early-stage listing suitability review introduced March 2016

78 listings rejected as at 31/1/19 – see Listings Compliance web page http://www.asx.com.au/regulation/compliance/listings.htm

Particular focus on emerging market issuers and very early stage start-ups

Some other matters to note

Questions?

Thank you.